The hidden power of coops

A group of scholars at the University of Wisconsin recently counted nearly 30,000 cooperatives in the United States operating at 73,000 locations. The vast majority are consumer cooperatives, with 343 million memberships (many people belong to multiple co-ops, hence the number of memberships exceeds the U.S. population). Another 7 million memberships can be found in producer and purchasing cooperatives. Credit unions, which are essentially banking cooperatives, have 92 million members. Electrical utility co-ops reach 42 million Americans. Agricultural cooperatives have three million members.

The cooperative sector owns $3 trillion in assets, generates half a trillion dollars a year in revenue, and pays 856,000 people $25 billion in annual wages. Their multiplier impact on the economy supports more than two million jobs nationally. In Minnesota, which is not only the Land of 10,000 Lakes but also the state with 1,000 co-ops, another survey of just a third of them found they were contributing seventy-nine thousand jobs in the state and more than $600 million in state and local tax revenues.

Cooperatives can now be found in business services, child care, hardware, telecommunications, and insurance. In 2009, as Congress was debating whether to include a “public option” in health-care reform legislation, a compromise was seriously considered that would have prioritized the creation of state-based health-care cooperatives—underscoring the increasing importance and bipartisan appeal of these models. More recently Congress has been considering transforming the two home-mortgage giants, Fannie Mae and Freddie Mac, into a nationwide securitization cooperative owned by member banks and credit unions.

An underappreciated characteristic of co-ops is that nearly all of them fit our definition of locally owned—that is, probably 99.9 percent are connected to a particular place and owned by geographically proximate members. Even large co-ops that sprawl across the country have many of the characteristics of local businesses. National producers co-ops, like Land O’Lakes and Organic Valley, represent small farmers around the country who are eager to sell, process, and distribute their products regionally. Adam Schwartz, vice president for public affairs and member services for the National Cooperative Business Association (NCBA), says, “No matter how large a cooperative is, because it is owned by the individual farmers or individual consumers or small businesses, I feel very comfortable making a case that co-ops in any form support local business.”